By Clara Denina
LONDON (Reuters) - Gold edged down on Tuesday, consolidating below its strongest level in four months as investors awaited data due later in the session for clues on the pace of the U.S. economic recovery.
A spate of soft data from the United States and China has raised concerns about the outlook for global growth, drawing investors back to gold, which has risen more than 10 percent this year, after a 28 percent drop in 2013 that put an end to 12 years of gains.
Spot gold was down 0.2 percent to $1,334.80 an ounce by 1238 GMT, having gained more than one percent to its highest since October 31 at $1,338.60 on Monday.
U.S. gold futures for April delivery stood at $1,335.10 an ounce, down $2.70. They jumped to a four-month high of $1,339.20 in the previous session.
"The drivers for gold have not changed much ... The U.S. data has continued to be on the weak side, the dollar has been a bit under pressure again," ABN Amro analyst Georgette Boele said.
"In fact, the rally will not probably run out of steam for the moment as long as this data and the dollar stay weak but on the other hand we are still convinced that the economic situation will turn around and gold will come under pressure again."
The dollar was down 0.1 percent against a basket of main currencies ahead of data showing U.S. December house price index and consumer confidence for February.
Investors will also be looking ahead to Thursday, when U.S. Federal Reserve Chair Janet Yellen speaks to the Senate Banking Committee in her semi-annual testimony about monetary policy.
Yellen's first comments since replacing Ben Bernanke as Fed chief have largely supported the pace of the stimulus tapering, suggesting recent weakness in the economy was merely a blip.
An increase in holdings of bullion-backed exchange-traded funds is also reflecting some renewed interest from investors, analysts said.
Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.41 percent to 801.61 tonnes on Monday from 798.31 tonnes on Friday.
Turkey slashed its gold holdings by 31.171 tonnes to 488.578 tonnes in January, data from the International Monetary Fund (IMF) showed.
ASIA BUYING
In the physical sector, Indian and Indonesian buyers purchased small amounts of gold bars, keeping premiums against the spot London prices steady at $1.20 to $1.50 an ounce in Singapore.
Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange over cash gold were about $0.50 to $1 an ounce on Tuesday, down from a high around $11 last week, indicating declining demand and making it less attractive for importers to bring gold into China.
Hong Kong's net gold exports to China fell 5.4 percent to 89.745 tonnes in January from 94.847 tonnes in December, reflecting a slowdown in demand after China's record purchases in 2013.
Silver, which also hit its highest since October 31 at $22.16 an ounce on Monday, fell 0.8 percent to $21.78 an ounce. Platinum dropped 0.2 percent to $1,428.50 an ounce and palladium was down 0.4 percent to $735.17 an ounce.
(Additional reporting by Lewa Pardomuan in Singapore; Editing by Louise Ireland and David Evans)
